Tuesday, May 14, 2013

With Bangladesh, is the consumer partially at fault?

Quick: How many of you can name which country each item of clothing you're currently wearing came from?

I'll assume it's no one. Most of us probably couldn't even say which brand each piece belongs to without looking.

The factors that determine whether or not we buy an article of clothing are typically style, cost and comfort. Very low on the list is country of production — if it is even considered at all. But I wonder if the collapse of the textile factory in Bangladesh, and the loss of 1,100 lives, has prompted more Americans to become socially-conscious shoppers.

The only problem is that 97 percent of apparel sold in the U.S. is made overseas, according to the American Apparel & Footwear Association, which means consumers have little choice even if they wanted to pay more to purchase clothing made here at home.

There's been much talk lately about how American consumers perpetuate this cycle of cheap clothing because they seek to pay as little as possible for a T-shirt or pair of jeans. But the consumer isn't the bad guy here. The onus falls on the manufacturer to make sure employees work in safe conditions. If they fail to do so, ideally, consumers should hold them accountable, but of course many won't.

There is no feasible way to correct the race to the bottom in the textile industry, as there will always be a market for cheap clothing in the U.S. All the consumer can do is hope that the fear of bad publicity is enough to push these companies to guarantee the safety of their workers.

Do you agree, or can the consumer have more influence? Have you started paying more attention to the "Made in" label?

It is estimated that making the factories in Bangladesh safer could cost as little as an extra $.10 per garment. I think if people knew this, they just might pay a little more (I know I would) for ensuring the safety of the workers. At least I hope so.

And if more people had union wages, lexi, they wouldn't need as many govenment services like SNAP, etc, and they could afford to shop at other places than Wal-Mart. Besides, as far as I can see, it's not the union worker who doesn't want to pay more for services, they just can't afford to, while the wealthy who benefit greatly from tax breaks don't want to pay a little more for roads, and other government services that they do benefit from.

We, as consumers, want to pay the least that we can for the highest quality that we can get for not only our clothing, but everything else. We, as employees, want to be paid the most that we can get for the least work. Both desires are rational economic behavior, but are in oposition to each other. The tension is felt by manufacturers, who can't, at the same time, pay employees enough to support the lifestyle to which they'd like to be come accustomed and provide products at low cost. The solution for them is to send the work to lower-cost labor markets such as Bangladesh. So, in the final analysis, it's not the manufacturers who are ultimately responsible for sending jobs out of the country, it is we, as employees and as consumers.

This is not to say that we as consumers are solely responsible for the Bangladesh factory collapse. I can only hope that this disaster will serve as Bangladesh's Triangle Shirtwaist.

Oh, please, lexi, sarcasm doesn't become you. The fact is, though, that "a rising tide lifts all boats", but wages in the US have been stagnant for years (except for the wealthy, where the top 5 or so % gained 93% - that's NINETY-THREE % - of the income growth in 2010).

I think that I would be satisfied if the minimum wage had just kept up with inflation - which would make it about $23 per hour now. Seriously, though, it is said that it takes about $16 per hour to afford the basics in IL (I suspect that is really more for the metro Chicago area than downstate). I find it sad that the owners or CEOs of companies have their worth tied up in their own compensation so much that they couldn't "sacrifice" a few million $$ in their annual salary & pay their employees a little more. It would pay off in the long run - more stability in employment (even in this economy, the turnover at Home Depot is pretty high, and it costs more to replace even a $10/hr employee than people think, not to mention companies lose business when the employees that actually do the "selling" of products aren't around long enough to gain the confidence of customers). Then the CEO uses all their available tax breaks to avoid paying as much income tax as possible, and their employees can't make up the gap, so the state has to pay the difference. And it shows, in rising tax rates for what is left of the middle class. And increased usage of SNAP & Medicaid & insurance for kids, etc. And more bad roads & bridges & things like that.

It is always interesting when someone discovers for himself or herself a law of the universe.

A good education kind of speeds up that process.

And BTW -- "there is no such thing as a free lunch." Milton Freedman.

Well known U.S. manufactures using oversea contractors have health and safety standards written into their supply contracts and do compliance inspections so as to avoid bad publicity. I attended a Chicago Bar Association lecture on this a few years ago.

JerryB, I think that there are lots of people who have a good education, but not necessarily the right education for understanding how the world works. If an education didn't include anything on economics or marketing, and that deficiency hasn't been remedied since, then one might believe that those wicked employers are the ones sending jobs overseas, or that if that evil CEO just gave up a little of his ill-gotten compensation, his workers could be on easy street.

Your proposed cure is worse than the disease. If the minimum wage kept up with inflation, we'd have more inflation because those wage costs have to be passed on somewhere. If more people made union wages the income gap would be even more severe because those who didn't earn the union wages would be out of jobs entirely. The state would have to pay out even more in benefits.

The problem isn't that many low-level employees aren't paid what they are worth; the problem is that what they are worth isn't as much as they would like it to be. Redistributing from the CEO salary doesn't cover the gap at all.

You are correct about the tax problem but your blame is misplaced. Yes, companies take advantage of every tax break available. Why wouldn't they? Do you voluntarily pay more than you have to? The problem is that the government hands out so many breaks that our so-called progressive system is actually regressive. I'm sure you'll join me in supporting a flatter, broader tax because it's the only way to solve the disparity.

It's fine to say that companies should pay employees more or pay more in tax, but the fact is that if they pay people more than they are worth and pay more tax than required, the competition will destroy them and everyone at the company will lose his job. You really need to think through the real world economics before you propose solutions because the unintended consequences of your ideas would make everybody worse off.

Agree with your last post except for one thing. In the first sentence of your last post delete "good" and substitute "expensive."

Another thing -- guys and gals that can do math and science -- such as you and me -- can also do the social science, literature, and fine arts stuff.

But the liberal arts majors are lost with anything more complicate than 2 plus 2.

Also without having taken calculus they have no idea that the optimal amount of something subject to a constraint may not be the greatest amount of the same thing. Or that the marginal rate of return is a first derivative of some function.

And they think I lie when I say I can easily compute interest due after a period of time even when compounded each millisecond.

And to add to what I wrote to LizH, no one who cares about American workers can support ObamaCare. It causes employers to cut even more jobs here, locate even more functions overseas, and raise prices even higher such that the minimum wage has an even harder time keeping up with inflation. Anybody with a minimal understanding of economics could see that coming. Why people don't make the connection that the poor always pay the price for mandates/programs designed to help them is beyond me.

Greg says -- [ If more people made union wages the income gap would be even more severe because those who didn't earn the union wages would be out of jobs entirely. The state would have to pay out even more in benefits.]

This point is made in every undergraduate economics class by looking at supply and demand curves for labor and measuring the "area under the intersecting curves."

Just to be technical -- "short run" this may not be true because it takes time for various factors to equilibrate -- but "long run" it is almost always true.

Also note that when the cost of labor is too high -- employers find substitutes in the form of equipment, production techniques, etc.

JerryB, lots of people who haven't taken calculus know the things you claim they don't (they cover that in some high school courses -- perhaps even some advanced junior high school courses). Again, your arrogance turns out to be wrong.

Like I suggested to MCN, perhaps you could make your points without the boasting or condescension. It makes your mistakes easier to overlook (or at least not comment on).

ZORB REPLY -- This problem is really getting worse and I can't diagnose it. Bad day for so many to be caught in the filters because I was away from my desk all day (and will be so tomorrow, so let's cross our fingers, everyone)

As you know I have been taking econ courses recently at U of C and NU so as not to embarrass myself vis-à-vis MCN, Greg J, and Boris.

Now I can do Black-Scholes which btw is b.s. because stock market returns are not normally distributed (not Gaussian) -- which is a stable distribution obeying the law of large numbers. Rather they can devolve into a Cauchy distribution with those scary "fat tails -- black swans."

JerryB, don't bother lexi. She's busy searching for evidence that I ever claimed "that every position taken by Milton Friedman was debunked and erroneous" -- or she's tacetly admitting she was being untruthful about me having made such a claim, and is hiding in shame for so blatantly misrepresenting my position (I would call it lying, but that might be considered harsh).

Back to Bangladesh, if I may. They need growth and development, which has to start somewhere. The people working in the factories, to the extent they are working freely (unlike in China), are better off having the US presence there than they were before. That doesn't mean their lives are ideal and it doesn't mean that conditions are perfect or even ok. What it represents is a significant first step in development similar to what our ancestors took on. Obviously not all societies develop at the same time or in the same way, but a consumer shouldn't feel ashamed of supporting economic growth in just about any country. It's never easy, it's never quick, and it's never without setbacks like what we've seen, but some of the other countries in the region have improved and so can Bangladesh.

It's too bad that there isn't a widespread certification program for Fair Trade clothing like the ones for, e.g., fancy coffee and chocolate. Granted, clothing is a much bigger market, but there's got to be some consumer base that would pay a little more for clothing guaranteed to have been produced under humane conditions.

I highly doubt that the loved ones of those who died in that Bangladeshi factory consider themselves "better off having the US presence there than they were before."

Greg J is correct. My family came to this country in the Nineteenth and early Twentieth Centuries and they started out working in sweat shops under terrible conditions. Were it not for sweat shops, they could not have come here.

While I think modest increases in minimum wage could be handled without the doom and gloom massive unemployment that opponents always tout, I agree with your overall economic assessment.

However, I feel like the right side of the spectrum likes to hide behind the economics. So to put a socieological/public policy question to you: What would you say to a person that the laws of supply and demand say isn't worth more that $5/hour? If your answer is get more education and work harder, how would you address the very real barriers of the lower class attempting to do this en mass.

Other stray thoughts:

"guys and gals that can do math and science -- such as you and me -- can also do the social science, literature, and fine arts stuff." Yeah, the world would go nuts for more plays written by engineers and sculptures created by the UofC Econ department.

Jimmy G, did your family come to this country specifically to work in sweat shops under terrible conditions? They already had jobs waiting for them by name? If so, I'm surprised.

My guess is that they had other plans, and had to accept anything they could get, which turned out to be sweat shops. The sweat shops were not instrumental in them coming here, probably the boats were.

To be good -- get a well rounded education and then specialize. I would expect no one to be both a world class playwright and a world class economist.

But I believe that MCN and I know more about literature than about 75% of CoS commenters. MCN and I just reread the Iliad. I have posted haiku on CoS. I was basically talking about consumers of literature and the arts.

There is at least a nominal effort to police the diamond industry for conflict diamonds and the "fair trade" coffee label is getting recognition. We also ban the import of certain items such as ivory. The Dow Jones Sustainability Index tracks corporate committment to good citizenship.

Does anyone object to these developments? Is it crazy to think that these concept can't reasonably expand over time? I could support the development of a "UL" or "Good Housekeeping Seal" that let's people know that clothing was made in a responsible manner.

This is consumer driven. Businesses are in business to meet consumer demand - pure and simple. If they don't, they are out of buisness - unless they get a gov't subsidy.

MrJM,

"I am wearing currently New Balance shoes because 1) they are high-quality, and 2) they were made in the United States. And I believe those reasons are not coincidental." - You are wearing NB becuase that is what every middle-age white male wears (me included). It fits our wider feet better than Nike, Addias, etc...

LizH,

"I think that I would be satisfied if the minimum wage had just kept up with inflation - which would make it about $23 per hour now. Seriously, though, it is said that it takes about $16 per hour to afford the basics in IL" - I thought you said you were a finance person?

Xuuths,

"Ah, the debunked and erroneous Milton Friedman. Reality showed he was oh so wrong. Feel free to consider him an expert. Even your heroes are wrong. Sheesh!" - Please tell us debunked him, your hero Paul Krugman and Dienne?

And to to add to JerryB's quote: "Also note that when the cost of labor is too high -- employers find substitutes in the form of equipment, production techniques, etc." - "Etc" includes location of production.

ChrisH,

"What would you say to a person that the laws of supply and demand say isn't worth more that $5/hour? If your answer is get more education and work harder, how would you address the very real barriers of the lower class attempting to do this en mass." - If I may. Those folks have had an opportunity with 13 free years of gov't education. If after that, they cannot make themselves worth at least $5,00/hr, then either the individuals have a problem or if this is happening by the hundreds of thousands, then we have a problem with the education sysem or perhaps some other part of society. As the old saying goes, "90% of life is just showing up". That definitely applies to minimum wage jobs - show up on time, obey instructions, and put forth an effort" If you do that, you should not be in minimum wage for long.

Even if every single person in the world got the education and training needed to get them out of low wage jobs, somebody would still have to do those low wage jobs. They need doing. They won't cease to exist just because everyone would rather be doing something else. So, how should we treat those people doing the jobs that are necessary to make the rest of us more comfortable?

Also, if you really were smarter than everyone else, you wouldn't have to tell everyone. They would already know. But, hey, I have a liberal arts degree so I'm probably really stupid.

"Jimmy G, did your family come to this country specifically to work in sweat shops under terrible conditions?"

Had there been no sweatshops, there would have been no jobs for them here. Let us say that there had been strong unions and only comfortable, high paying jobs. Who would have needed non-English speaking immigrants? Who would have hired them?

"What would you say to a person that the laws of supply and demand say isn't worth more that $5/hour?"

I wouldn't presume to have a one-size-fits-all answer to everyone's personal situation. People have all kinds of reasons for not being in a good place financially. I tend to agree with Barry3 that work ethic means a lot but sometimes that's learned and not innate. An awful lot of these $5/hour-type jobs would be starter jobs. I think that most people of reasonable intelligence and health can get by in this country if they have a decent work ethic, realistic expectations, and live within their means. It would help a lot if our education system was realistic about career choices instead of having this "follow your dreams" and "you can do anything" mentality, and turning building self-esteem (which is a good thing) into an unhealthy sense of entitlement.

I don't object to the developments you are talking about, and Pan mentioned too, but I'd like to see any expansion of the concepts be regulated privately (e.g., by social condemnation) rather than by the government. Of course some import restrictions are sensible. You didn't raise this (JerryB did) but I'm completely against tariffs.

That's an interesting thought experiment. What do you think would happen? The following is my best guess.

When you take away comparative advantage for labor (you said "every single person in the world"), I agree that we'd still need people to do low wage jobs, particularly in the service industry. Therefore, all the education in the world won't get a certain percentage of people out of low wage jobs. Those jobs would go to the people with less natural ability, or less work ethic, or who choose those jobs, which is pretty much what happens today.

It doesn't matter what someone would rather be doing because as long as there is sufficient demand for a certain job, that job will exist. I allow that the marginal cost of labor might increase under your scenario but that would only be in nominal terms given how much better off society would be. What would happen, given the advance training that you stipulate, is that the marginal product of labor would increase too, right? As everyone else is better off than they were before in a material sense, it's highly likely that even those in relatively low wage jobs would be pretty well off too. Therefore, the low wage people would have a higher quality of living compared to today even though the wealth disparity might be the same as it is today.

"So, how should we treat those people doing the jobs that are necessary to make the rest of us more comfortable?" We should treat everyone politely. I don't see how that changes under any scenario.

Really, I was making a joke. It's great that you're well read, but call me when you write a good novel.

Jerryb and gregj,

Thanks for answering my question.

Are you saying every busboy is just a restaurant owner in training?

Do me a favor over the next few days. Try to make a mental note of the number of store clerks and other workers in the minimum wage to $12/hour (low to no benefit) job that you see who are over 35 years old. Dare you to ask them why they haven't moved on to better management positions.

I apologize if I'm sounding aggressive, but I think a lot of us (including me) spend most of our time with other college grad professionals and we forget that 25% of households get by on 25k or less. Not all of them are on their way up the ladder.

Getting back on topic. Good to see there's common ground, but I do want to note that we have put sanctions on countries for human rights violations in the past.

[Also, if you really were smarter than everyone else, you wouldn't have to tell everyone. They would already know. +1]

I love this. Some liberals/progressives obtain a catchy phrase that can be printed on the front or back of a T-Shirt and they think they can use this to needle a JerryB or a MCN.

I know a lot of mathematical physics but Eric’s father knows incredibly more. (I have yet to figure out Quantum Mechanical Spin from first principles.)You probably know so little that there no way to judge who is smarter. If Professor Zorn tells you he is smarter—believe him.

Let me assure you that you have absolutely no way of even knowing what you don’t know because you couldn’t even imagine such things using your wildest imaginations.

"Are you saying every busboy is just a restaurant owner in training?" Nope and neither are they a lifelong minimum wage earner. My first job, other than paperboy, was a K-Mart stock boy at $2.30/hr - minimum wage. It wasn't my lifelong dream to be either the stock boy nor the store manager in 40 years. It was a summer job where I learned to show up on time, follow instructions, and leave at the end of my shift. By the end of the my "career" there (3 months later), I was making $2.40/hr.

"Try to make a mental note of the number of store clerks and other workers in the minimum wage to $12/hour (low to no benefit) job that you see who are over 35 years old. Dare you to ask them why they haven't moved on to better management positions." - I would start with the crappy economy of the past 5 years.

I think you are misunderstanding us. You asked -- [If your answer is get more education and work harder, how would you address the very real barriers of the lower class attempting to do this en mass?]

I objected to your premise of movement "en mass."

Those with some combination of talent, smarts, and hard work will move up. Others will be left behind. But as Greg explained above -- even the menial workers do better in a thriving society. That bathroom attendant at a posh restaurant does much better than he or she would if such restaurants did not exist.

SF frames the question correctly -- [Do you really believe that the people in low wage jobs are there because they have less natural ability, less work ethic, or choose to be there? ]

Basically yes-- at least in the long run. I know of immigrant Poles who were in menial jobs until their English skills increased. Young single mom's also have a problem. But I basically do not see barriers. Immigrants come to the U.S. because of the absence of such barriers to upward mobility.

You are correct, JerryB. My knowledge of mathematical physics is absolutely zilch. Somehow, I manage to make it through life anyway. It's obviously an empty existence, filled only with my extremely fulfilling job and passionate interest in all sorts of varied subjects that sadly do not include mathematical physics.

I also suspect that Professor Zorn would never dream of telling people how smart he is.

Rather they tell you their area of expertise. To make you feel better would you like a list of things I am not good at? I will name three -- no musical talent, I can not dance, and I have no aptitude for foreign languages.

Wendy C -- has skill teaching children with special needs. She also has smarts with respect to teaching poor children. I value her opinion in those areas. She told us very early on at CoS what her special skills were.

I think you're missing my point. You are correct that many people transition through low wage jobs to better things, but many don't. The data is clear that economic class mobility is declining. On a pure economics basis, wealth concentration and supply and demand are going to keep the free market wages for a growing population of workers at a near/below poverty level.

If you feel the proper response to a person who can't rise out of poverty despite a willing to work hard is essentially "tough sh**. Capitalism says you don't deserve any help from the rest of us" or you think these people don't exist, then we're at an impasse.

Barry, you seem to have forgotten that I've choosen to not bother you with you anymore because you don't debate in an intellectually honest way. Anytime you can't deal with someone's refutation, you just change arguments and try to rewrite the history on any prior comments.

"Do you really believe that the people in low wage jobs are there because they have less natural ability, less work ethic, or choose to be there?"

Those are the top 3 reasons that come to my head. In many cases, it's a combination of those. Do you think there are more common reasons? If so, what are they?

@ChrisH,

"I apologize if I'm sounding aggressive, but I think a lot of us (including me) spend most of our time with other college grad professionals and we forget that 25% of households get by on 25k or less. Not all of them are on their way up the ladder."

I live in a working class neighborhood so while I may work with college grad professionals, my neighbors aren't for the most part. As I wrote earlier, I don't presume to understand everyone's individual situation or to have an answer to their problem. It's not always a matter of "work harder" or "get smarter."

But the very low-wage jobs are seen as entry-level. Of course some people never make it past that.

It's not true that a growing population of workers must remain at or near or below the poverty line. These conditions are more likely to occur when: (a) prices are artificially high due to regulations/taxes that are passed on to consumers; (b) wages are artificially depressed (e.g., due to illegal immigration); (c) some lower marginal product jobs are paid more than they are worth, which creates wage pressure on remaining jobs; (d) labor competition arises from comparative advantage and/or relocation of certain jobs overseas.

I'm not contending that the free market solves this problem completely and indeed it would make some worse off (e.g., union workers) but I'm perplexed when those who advocate certain taxes, regulations, and labor rules turn around and complain about wealth disparity. Whether you're talking about ObamaCare or the social engineering that goes on in the tax code, it's nonsense for the left to blame wealth disparity on conservatives or free market economics.

Make it easier for the well to do to hire the poor for yard work, house work, and nanny care. Now the tax regulations are burdensome. In other words make it easy for the poor to live off the rich by providing services to the rich.

If society is organized correctly it should thrive -- and a rising tide raises all boats. This was the thesis of Adam Smith 's WEALTH OF NATIONS.

Also, anyone concerned about American workers not earning enough should be an advocate for deporting illegal aliens. The simple economics is that an increase in the supply of labor will reduce wages and employment. Those "jobs Americans won't do?" Oh, they'll do them if you pay them enough. I expect my friends LizH and SF will be adamantly against any concession to illegals as they appear to be the most concerned about what American workers are earning.

Good debate. As usual, I think we reach the point where we somewhat agree on what the problem is, but not how to fix it.

I don't advocate for big labor law changes. I just encourage the well off among us not to gripe about how those making under $50k don't pay taxes and paying a little more so everyone has some medical coverage. It's a humanitarian argument, not an economic one.

Jerryb, regarding "Wealth or Nations", the theory is sound but I wonder about how it's been affected by industrial/technological changes that Smith couldn't have imagined. Do you think his thoery envisioned reaching a point where technology and population lead to a real sustained suplus of labor whose marginal value was low.

Actually, JerryB, there is one commenter who frequently tries to tell us all how smart he is -- usually in the same posts where he makes some error that I sometimes end up correcting. (cough**MCN**cough)

Always good chatting with you and I appreciate your insights. I think we can agree that those who make under a certain amount should pay less in taxes, and we shouldn't gripe about that. The problem is that instead of getting people to pay more to fund welfare (medical or otherwise), we have a system where attempts to tax the wealthy boomerang back to the middle and lower classes. We need to fix that.

“Surplus of labor” is a very ambiguous term. But I think I understand the point of your question.

WEALTH OF NATION is over 1000 pages long. There are tons of mind numbing details. Furthermore—since Smith was at the birth of modern economics – he does not use the modern labels for many of his ideas.

But to get at your question – Smith contrasted the low level labor required to service the stagnant China of his day – with the more diversified high level labor of a thriving England. He established that the average English menial worker had a higher income -- and was much healthier because of that – than the worker in China.

You ask –

[Do you think his theory envisioned reaching a point where technology and population lead to a real sustained surplus of labor whose marginal value was low?]

Smith did write that the demand for labor will be greater in a growing economy as compared to one that was advanced but already built up. Nowadays –China is a growing economy playing catch-up capitalism while the U.S. is already advanced and built-up.

One theory is that the U.S. can only keep advancing by technological improvement broadly defined. (See economists Solow and Barro.) At the macro-economic level the theory posits better tools = more productive workers = higher wages. That was Smith’s thinking also.

It was feared in Smith’s time – and is still feared -- that machines would eliminate jobs. At the micro-level – yes -- some jobs became obsolete. But at the macro-level –technology has helped -- not hurt – the demand for labor. This is based on the rising tide lifts all boats theory.

I have been a professional furniture mover and an attorney. Moving furniture is much harder than taking depositions. I would want more money to move furniture than to take depositions. However there is a larger supply of furniture mover than of attorneys. Thus where the supply and demand curves intersect determines the wage for each occupation.

As Greg points out – if the supply of menial workers decreases (e. g. eliminate illegal workers) the yuppies will have to pay more for their yard workers, home workers, furniture movers, waiters, etc.

BTW: Menial workers do have skills. A journalist went on the road doing such menial jobs and found that the workers were much more efficient and productive than she. As you well know –Colbert collapsed after a half hour of picking fruits and veggies. There is a spoof video of that.

Nice write-up and Nickled and Dimed was an interesting book. However, I still see a risk that our current set-up (Economic, educational, etc) is beginning to create more and more "furniture movers" than our economy will need.

A rising tide lifts all boats, but people still drown in the tide.

GregJ,

Don't your thoughts on illegal immigrants translate into a type of government intervention to protect American workers. In other words, intervention similar to the type Jessica suggests (albeit for workers in a different country). If we're truly free market, American workers should have to compete against foreigners willing to work for less regardless of location, right? Otherwise, you are conceding that there are national/societal interests beyond pure economic interests.

My views on illegal aliens protect American taxpayers. I've never advocated a 100% free market (as I favor some simple, fair, effective regulations) but my solution to protect taxpayers by removing illegal aliens doesn't involve much, if any, trade protectionism - except for some service industry jobs and a few others that need to be performed here. That's because I also advocate unilaterally eliminating tariffs and duties. Therefore, we still have the benefits and burdens of competition and the benefit of comparative advantage. There is a little protectionist "leakage" (i.e., those service industry jobs) but in this case it should be outweighed by the benefit to taxpayers and of controlling our borders for security purposes.

Real wages have not gone up since 1970 -- but total compensation has risen. The extra benefit is the price of health insurance which has steadily risen.

Furthermore, from 1945 to about 1970 the U.S. worker was in a near monopoly position with respect to heavy industry. Since then they had to face world competition. That put competitive downward pressure on wages.

Growing up, I had a ringside seat for the clothing manufacturing business in the US. My maternal grandmother was a seamstress in a Brooklyn factory for 30+ years. On the other side of my family, my paternal grandfather's mother owned a clothing factory in Italy, and then in the US and then there was some back and forth between both countries while I was growing up. Her kids were in the business and my Dad's father ran factories in NY, Puerto Rico and, during the 1960s opened factories in the South (NC and VA). He didn't start in the clothing business (he'd owned another business), but by the time I was born he was opening and managing clothing factories.

Don't imagine anything magnificent. A clothing factory is a room full of sewing machines and light bulbs and checking and packaging areas. The factories can be quite large, but there's nothing complicated about them.

It seems inevitable that a business like this (relatively low start up costs, payment by the piece, formal education unnecessary), would keep moving to places where labor is abundant/cheaper than the previous locale. All that's needed is enough of an infrastructure to transport goods and a way to keep the power at the factory turned on.

In the sixties, they were opening factories in the South because some of the Southern states began to actively court low-skill manufacturing employers with tax breaks and the lure of even cheaper labor than they had in NY. It was union seamstresses in NY, but don't think autoworker pay and benefits--not even close. Even if there had been no union, the labor was at that time so much cheaper in the South, that they'd have moved there anyway.

The Southern governors were so enthusiastic that my grandfather got their support/protection to open integrated factories, which he did, which is kind of a big deal because he started doing this in the South in 1962. Inevitably, as the South became more prosperous, Asia became the place to go. By that time, everyone in my family who was part of the business was retired or soon to be retired.

What's interesting is that I think that when the business moved South, although labor was paid less, the owners brought their standards for acceptable working conditions with them. They'd never think of locking people into an unbearably hot fire trap. I went to these factories many times as a kid and they seemed like decent places for workers. Definitely not sweat shops. People had breaks, sick days, benefits and small raises if they did well. Sitting in front of a sewing machine all day is hard work, but so are lots of other jobs and there's worse out there.

I don't how the minimal standards for work conditions in a place like Bangladesh evolve except from tragedies, arrests and public outrage. This is what changed conditions in the US, thankfully, before my grandmother was employed in factories. Unlike the Northern factory owners who moved South and sent their own managers, I imagine that Bangladeshi owners and managers are flying by the seats of their pants, with shortsighted thinking and without any sense of viable alternatives. Maybe this tragedy will lead to the beginning of change. I do think it's more likely that change will come from local pressure than from the major retailers who are also under pressure to close their eyes and get the product cheaper than their competitors. They can do some, but there has also got to be considerable local pressure, IMO.

Even in standard micro-economic theory it makes economic sense to provide good working conditions and to pay slightly above the going rate to retain good, semi-skilled workers such as seamstresses. If conditions and pay are good -- the threat of being fired is more meaningful.

Of course slavery is morally abhorrent. But many historians have argued that except in rare situations it does not even make economic sense.

JerryB, your first sentence contradicts that of Boris Gendelev and other "expert" comments -- never pay a dime more than someone is worth or what you are forced to pay.

I guess the wealth of the American South for the pre-Civil War era was a "rare situation" -- almost their entire economy was related to slavery. In fact, I think you'd be hard pressed to find any legitimate historians (not the fake Gingrich) who argue that slavery anywhere was bad economics.

Please, pretty please, with sugar on top, provide the evidence to support that outrageous claim.

(I don't think you're learning very much in your economics classes if this is your takeaway. Should we now criticize how economics is taught nowadays? Or perhaps it is the individual student?)

Jerry is right when he states: "Even in standard micro-economic theory it makes economic sense to provide good working conditions and to pay slightly above the going rate to retain good, semi-skilled workers such as seamstresses." - Lose those workers and the business has to incur the cost to hire new workers and then hope they become good workers and not just average or below average workers.

And yes it would have made good economic sense to put those workers in a safe building.

About "Change of Subject."

"Change of Subject" by Chicago Tribune op-ed columnist Eric Zorn contains observations, reports, tips, referrals and tirades, though not necessarily in that order. Links will tend to expire, so seize the day. For an archive of Zorn's latest Tribune columns click here. An explanation of the title of this blog is here. If you have other questions, suggestions or comments, send e-mail to ericzorn at gmail.com.
More about Eric Zorn

Contributing editor Jessica Reynolds is a 2012 graduate of Loyola University Chicago and is the coordinator of the Tribune's editorial board. She can be reached at jreynolds at tribune.com.